WTO clinches key procurement reform deal

Geneva, December 17, 2011

The World Trade Organization (WTO) clinched a landmark reform of its government procurement agreement, opening $100 billion of government contracts to foreign competition and paving the way for more countries, including China, to join the pact.

"It's an extremely positive development for the parties to this agreement, for the organisation and for the world economy at large," WTO's director general Pascal Lamy said at a news conference after last minute negotiations clinched the deal.

US Trade Representative Ron Kirk said the culmination of 10 years of negotiations clarified rules and represented an opportunity for US suppliers of goods and services.

WTO officials estimate the deal will open $100 billion of procurement contracts in the 42 member countries, expanding the original GPA, which dates from 1994, into more government agencies, services and build-operate-transfer arrangements.

"It's a very important and positive signal for European companies, big and small," EU Internal Market Commissioner Michel Barnier said.

"This agreement marks real progress, more openness, more reciprocity and more balance in our trade relations...which is a good signal at this point because we have to act for growth and for jobs," he said.

Lamy said the agreement meant better discipline for awarding government contracts in infrastructure, transport and hospital equipment, and better use of public resources in an era requiring fiscal discipline.

"The GPA is an anti-corruption agreement," Lamy said.

Members of the pact had faced a "now or never" ultimatum to reach a deal after the chairman of the negotiations, Swiss diplomat Nicholas Niggli, said the available terms were the best they could expect in the current economic climate.

"We finished negotiating three minutes before the ministerial meeting started," he said, adding that the negotiations had dragged over the last seven days, and some of the nights too.

Although a deal will bring immediate dividends for existing members, a much more important effect will be to attract new members such as China, India and Russia, whose eventual participation could multiply the benefits.

"This hopefully will have a spillover effect," said Niggli.

"The possibility is immense. This effectively sets the stage to a wave of new accessions in the coming years," he said, adding that China and Jordan were already in an advanced stage of negotiation to join the club.

Chinese Commerce Minister Chen Deming said China was keen to join the GPA but blamed the current members for repeatedly raising the bar, while China was offering more and more.

China made its most recent offer on Nov. 30 but it fell far short of expectations, with a wide-ranging get-out clause and much less market access than diplomats had hoped for.

"We will continue to give offers until we accede to the GPA," Chen said.

Kirk pointedly called on China to speed up its accession to the pact saying that its market access offers still fell short.

"For example, we are urging China to cover state-owned enterprises, add more sub-central entities and services, reduce its thresholds for the size of covered contracts and remove other broad exclusions," Kirk said in a statement.

Lamy said bringing China into the agreement would bring another $100 billion of contracts under the GPA and Chen said the GPA members should take account of its developing country status and should not ask China to do anything they were not prepared to do themselves.

"The Chinese market is growing day by day and I estimate that by 2020 China will be the biggest domestic market in the world and the biggest importer in the world. Therefore existing members of the GPA should aim high and look at the long term, into the future," he said.-Reuters